Gregory Malkin Attorneys at Law

What You Need to Know About Bankruptcy

• Automatic Stay | Bankruptcy protection from collection actions such as wage garnishments, bank levy’s, foreclosures or eviction require that your bankruptcy petition be signed, filed with the bankruptcy court, and assigned a case number. You are not afforded bankruptcy protection by merely hiring a bankruptcy attorney. Further, wage garnishments that are already in place, can continue for up to one or even two pay cycles after filing.
• Cash/Bank Account | Bank account assets are not exempt. Therefore, on the day you petition is filed, you shall have no more than $150.00/filer in any bank account(s) as you will likely be compelled to pay and lose the amount of money in your account(s) to the bankruptcy estate. Outstanding checks do not reduce the account balance(s). You cannot simply withdraw the money from the account, file the bankruptcy petition, and then replace the same funds, as cash is also not exempt. Do not give the money to a family member/friend or make a loan to a family member/friend or buy luxury items such as a big screen TV or jewelry.
• Other Assets | If you are in possession of non-exempt assets at the time of filing they will be subject to seizure and potential sale by the Trustee. Some common non-exempt assets are: Money in bank accounts (other than (I.R.A.s), cash, interest of $5,000.00 or more in a car per filer, real estate that is not your primary residence, furs or jewelry, financial instruments (like insurance, stocks, bonds, etc.), interests in a company, business, copyright, recreational vehicles, boats, business inventory, or collections. It is a crime to fraudulently or intentionally fail to disclose all your assets in you bankruptcy petition.
• Tax Refunds | One non-exempt asset that Trustees often seek is an income tax refund for the current year, or prior years, unless it has already been spent before filing. The Trustee will ask to see documentation regarding your tax refund(s) and if it is large enough, he will seize your refund(s) for the benefit of your creditors. In fact, other funds owed to you by almost any source (including from a divorce) are also considered non-exempt assets and subject to seizure including any accounts receivable for a business, renewals and any money you may have loaned to others and are still owed.
• New Debt | Credit card or other charges and debts incurred with the intention of the same being discharged in bankruptcy may be deemed fraudulently incurred or otherwise non dis-chargeable, and there is a presumption of non-discharge-ability if any so called “luxury goods or services” debt or cash advances are incurred within 90 days before filing. Therefore do not make any such charges or incur any such debt within at least 90 days before filing the bankruptcy petition. Even charges made prior to the 90 days might not be dis-chargeable and could form the basis of an objection by a creditor or the trustee. If this is a concern, make sure to speak with your attorney.
• Income and expense information must be accurate | Your monthly income figure is your average income over the six (6) months preceding the bankruptcy filing. You must provide this law office with you payroll stubs for the six (6) months prior to filing the petition. If it is determined after assessment of your paystubs and expenses, that you do not qualify for a Chapter 7 bankruptcy then you may choose to pursue a chapter 13 bankruptcy case and sign a new fee agreement or you may request a refund. A refund may be issued for any amounts paid above $700.00.
• Chapter 13 Bankruptcy | A chapter 13 bankruptcy case generally involves making monthly payments to a Trustee over a3 to 5 year time period. If you are not eligible for a chapter 7 filing due to an income based test, then the Chapter 13 plan must be 5 years or until the debts are fully paid. A chapter 13 bankruptcy has several potential advantages over a chapter 7 case such as; in some cases seeking a reduction in the amount of any secured debt to the value of the associated collateral as long as the debt was not incurred within 910 days on a motor vehicle or within one year for other items of personal property; stopping the accrual of interest on income tax debt; avoidance of a home mortgage foreclosure; and the discharge of certain debts which would not be dis-chargeable in a Chapter 7. These benefits, as well as others, have been explained to me, and I have decided to seek a chapter 7 bankruptcy rather than a chapter 13 bankruptcy.
• Personal Injury and Other Such Assets | Awards and inheritance, if you have received or may receive a settlement or judgment as a result of a lawsuit or legal proceeding, the funds may be subject to seizure by the trustee, and the claim and recovery must be disclosed to the court and trustee. If you inherit from anyone, within six months after your bankruptcy discharge, then the inheritance will be subject to seizure by the trustee. A failure to report such funds, just as making any other false statement in the bankruptcy filing or at the meeting of creditors can result in your discharge being denied or set aside and even criminal charges against you.
• Non-dis-chargeable Debts | Some debts are not dis-chargeable and generally such debts include: Child support and alimony (spousal maintenance) or other domestic court orders (there are special rules in Chapter 13 cases); Income Tax debts; Student Loans; Fraud/intentional torts; Personal Injury from drunk driving; Criminal Fines and restitution; New debts.
• Trustee’s Request for Documents | The Trustee will mail you a letter requesting a variation of the following documents and it is your responsibility to submit copies of those documents directly to the Trustee prior to you meeting of creditors. This fowling is not intended to be an exclusive list: (1) the last two to three years of your signed Federal and State income tax returns, with all of the schedules and W-2 forms (IRS records can be obtained by calling (866) 860-4259); (2) a copy of the tax return for the following year regardless of whether or not your discharge has been issued. Failing to prepare or submit the income tax returns can cause a delay, dismissal of your case or the subsequent setting aside of your discharge as well as additional attorney fees; (3) a copy of bank statement(s) showing your account balance(s) on the date of filing and bank statements for the 2 to 6 months prior to the date of filing for all financial accounts in your name or the name of your business. You may also be required to explain any large deposits, withdraws or other debits; (4) copy of pay records or pay stubs for the two to six months prior to the filing of the petition; (5) documents showing that you have kept insurance in effect on any collateral regarding any secured debt; (6) most current statements on all financial accounts –, pensions, 401k, IRA’s, Mutual funds, Life insurance, etc.; (7) pay off statements for your auto and home; (8) copies of all auto, boat, motor home, mobile home and any other recreational vehicle titles or registrations, payoff statements and proof of insurance; (9) complete copies of any divorce decree, separation agreement, alimony/child support orders and property settlements entered by a court during the last 3 years to which you were a party.
• Court Attendance | It is necessary for the client(s) to attend a meeting of creditors. You will receive notice of the meeting soon after the filing of the bankruptcy petition. If you fail to appear at the meeting or the meeting must be re-scheduled, either because you failed to appear or because you failed to bring your driver’s license and social security card (or other proof of your social security number other than your driver’s license) or you failed to cooperate with the trustee’s request for documents or for any other reason, then you will incur an additional $150.00 attorney fee. Other such fees are addressed in the fee agreement, including an additional $75.00 fee for filing each amendment after the initial filing of the bankruptcy petition. Again, please note that you must bring you driver’s license and social security card to the meeting (some other documentation may meet the social security card requirement such as an original W-2 form).
• Discharge and Debt Accrued After Filing | Bankruptcy discharge normally occurs around three (3) to six (6) months after the bankruptcy petition is filed. You should receive your Notice of Discharge Order from the Court Clerk the same day that the notice is sent to me. After the bankruptcy petition filing you may resume your normal financial activities. You are responsible for your post-filing debts or contracts as those debts are not discharged.
• Keeping Collateral | In order to keep collateral (such as a car or home), which may be security on a car or a home debt, you must bring the debt payment obligation current and make the required payments in full and on time. If you do not reaffirm these debts, it is possible that you will not receive any reminder notes or bills or envelopes from the creditor(s).
• Credit Counseling | There is a requirement that you must attend a credit counseling class both before filing and after filing. See the Bankruptcy Process and Checklist page in the packet for a list of approved agencies.
• Payments Made Before Filing | Any payments on loans or gifts to your relatives or your business associates made within one year prior to the filing of the bankruptcy petition may be seized by the Trustee. Also payments in excess of $600 made to unsecured creditors within the 90 days immediately prior to the bankruptcy filing may be seized by the trustee. You must list those payments in the questionnaire.
• Business Assets | If you are operating in a business, the Trustee may seek the termination of the business and may cause the assets, inventory of the business and phone number to be sold and have the proceeds from the sale made a part of the bankruptcy estate. If this is a concern, make sure to speak with your attorney.
• Questionnaire | You have been given a questionnaire to fill out. The questionnaire must be filled out accurately and completely. Failure to fill out the questionnaire completely or accurately will only delay the bankruptcy filing and makes it impossible for your attorney to properly advise you.
• Cross-col-lateralization | If you have an asset, such as a car, home or bank account that is currently being used as collateral to secure one loan and you also have a second loan such as a credit card or unsecured loan with the same bank, the bank may attach that same collateral to the otherwise unsecured loan. Credit Unions largely engage in this practice. If you are paying an asset with a credit union and also have an unsecured debt with that same credit union, (specifically, with Arizona Federal Credit Union and/or Desert Schools Credit Union) it is important that you let your attorney know.
• You, the Client, must examine the petition and schedules carefully, and if there are any errors which require revision after the document is filed, then you will be responsible for the extra costs as generally set forth above.
• We are a debt relief agency | We help file for bankruptcy relief under the Bankruptcy Code.